NetBank Payment Systems sold its principal operating assets and net working capital yesterday to PAI ATM Services, LLC, a subsidiary of Payment Alliance International (PAI). The assets consisted primarily of servicing contracts on more than 8,500 ATMs nationwide.

NetBank was carrying the assets on its balance sheet at a higher value than the sales price. The bank will therefore record an additional impairment charge of approximately $2.0 million to bring the book value of the assets into line with the sales price. It is important to note that the ATM servicing contracts were recognized on the bank's balance sheet as intangible assets. Through the sale, the bank monetized them and thus converted them from an intangible into a tangible. This means the bulk of the cash proceeds represents new tangible capital that management can put to work in additional asset growth at the bank or other cost-saving initiatives. It also directly increases the company's overall tangible book value.

NetBank did not convey the NetBank Payment Systems name in the deal. PAI will operate the machines under the PAI ATM services name. PAI will re-brand the machines currently bearing the NetBank logo over the next 18 months. NetBank plans to honor its waiver of surcharges on these machines for its banking customers during the re-branding period.